Mountain Site discounts a customer's 10%, $2,000, 90-day note dated April 1, on May 15. The discount period is 45 days, and the bank discount rate is 16%. The maturity value of the note is $2,050. The bank discount is $41. The proceeds of the note are:
A) $2,050.
B) $2,009.
C) $1,959.
D) $2,000.

Question

Quizplus · Accepted Answer

The proceeds of the note are calculated by subtracting the bank discount from the maturity value of the note. Given the bank discount is $41 and the maturity value is $2,050, the proceeds are $2,050 - $41 = $2,009.

Mountain Site Discounts a Customer's 10%, $2,000, 90-Day Note Dated